On July 15, 2021, the Canadian Securities Administrators released Notice of Amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) which contains the final amendments (the Amendments) to NI 31-103 that are intended to improve protection of older and vulnerable clients. One of the ways in which the Amendments aim to do this is by requiring registrants to take reasonable steps to obtain and keep updated the name and contact information of a trusted contact person (TCP) from their clients. For more information on these obligations, please refer to our August bulletin here.
Although not a legal obligation up until now, it has always been considered advisable that a registrant attempt to obtain the TCP information from their clients so that there are individuals other than the clients who can be reached for information or for limited instructions in case the registrant detects or suspects irregularities regarding their affairs, such as diminishing mental capacity or financial exploitation. This would be the case even where the client has a designated attorney under a valid power of attorney (POA). A TCP can serve as a check and balance against the attorney where the attorney happens to be the individual who is exploiting the client.
The Amendments explicitly recognize this notion of the different roles played by the TCP and the attorney by newly defining the term trusted contact person as “an individual identified by a client to a registrant whom the registrant may contact in accordance with the client’s written consent”. The Amendments also add a discussion in the Companion Policy to NI 31-103 suggesting that an attorney under a POA could be an individual who is close to and may exploit a vulnerable client and a statement that a TCP does not replace or assume the role of a client-designated attorney under a POA.
In short, despite some overlaps in the respective roles of a TCP and an attorney, the two are distinct categories, and upon the expected coming into effect of the Amendments on December 31, 2021, registrants will be obligated to take reasonable steps to obtain the TCP information at account opening and keep such information updated as part of their KYC information update process, regardless of whether the client has an attorney or not.
September 30, 2021